The World Economic Forum and Zurich Insurance Group warned today of widespread "economic distress and social discontent" over the next 18 months unless world leaders, businesses and policy-makers work together to manage the fallout of the pandemic.
As economies restart, there is an opportunity to embed greater societal equality and sustainability into the recovery, which would unleash a new era of prosperity. This is the conclusion of a the report, Covid-19 Risks Outlook: A Preliminary Mapping and Its Implications, published today by the World Economic Forum in partneship with Zurich Insurance Group and Marsh & McLennan Group.
The report canvassed the views of nearly 350 senior risk professionals who were asked to look at the next 18 months and rank their biggest concerns in terms of likelihood and impact for the world and for business.
With significant pressures on employment and education - over 1.6 billion students have missed out on schooling during the pandemic - we are facing the risk of another lost generation. Decisions taken now will determine how these risks or opportunities play out."
The immediate economic fallout from covid-19 dominates companies' risks perceptions, the report says. These range from a prolonged recession to the weakening fiscal position of major economies, tighter restrictions on the cross-border movement of goods and people, and the collapse of a major emerging market.
Future systemic shocks
In examining the interconnections between risks, the report also calls on leaders to act now against an avalanche of future systemic shocks such as the climate crisis, geopolitical turbulence, rising inequality, strains on people's mental health, gaps in technology governance and health systems under continued pressure.
These longer-term risks will have serious and far-reaching implications for societies, the environment and the governance of breakthrough technologies. It reinforces the calls made in the Global Risks Report 2020, where a multistakeholder community rated environmental risks as being among the top five global risks for the next decade, and also warned of the extraordinary stress on health systems.
The latest update provides a preliminary picture of familiar risks, which may be amplified by the crisis and new ones may emerge. Two-thirds of respondents identified a "prolonged global recession" as a top concern for business. One-half identified bankruptcies and industry consolidation, failure of industries to recover and a disruption of supply chains as crucial worries.
With the accelerated digitization of the economy in the midst of the pandemic, cyberattacks and data fraud are also major threats - according to one-half of respondents - while the breakdown of IT infrastructure and networks is also a top concern. Geopolitical disruptions and tighter restrictions on the movement of people and goods are high on the worry list.
A second report, Challenges and Opportunities in the Post-Covid-19 World draws on the experience and insights of thought leaders, scientists and researchers to outline emerging opportunities to build a more prosperous, equitable and sustainable world.
Focus on risks
Saadia Zahidi, managing director of the World Economic Forum, said, "The crisis has devastated lives and livelihoods. It has triggered an economic crisis with far-reaching implications and revealed the inadequacies of the past. As well as managing the immediate impact of the pandemic, leaders must work with each other and with all sectors of society to tackle emerging known risks and build resilience against the unknown. We now have a unique opportunity to use this crisis to do things differently and build back better economies that are more sustainable, resilient and inclusive."
Peter Giger, group chief risk officer for Zurich Insurance Group, added: "Covid-19 has shown it is crucial to keep existential risks in focus, and climate change is one of these. As we reboot our economies, changes in working practices and in attitudes towards travelling, commuting and consumption all point to new ways to achieve a lower-carbon and more sustainable future."
"The pandemic will have long-lasting effects, as high unemployment affects consumer confidence, inequality and well-being, and challenges the efficacy of social protection systems. With significant pressures on employment and education - over 1.6 billion students have missed out on schooling during the pandemic - we are facing the risk of another lost generation. Decisions taken now will determine how these risks or opportunities play out."